A BR-D authoring application will take the elementary streams (video, audio, etc) and multpilex them together when building the project. Just like on DVDs, this is what allows you to switch between different audio languages/tracks on a Blu-Ray disc.

So, if you want to have an H264 video file with audio, don't use the Blu-Ray preset. Customize the H264 settings to get what you want.

Also, bear in mind that the Blu-Ray preset will give you as a result something that may only play when used to author Blu-Ray, ie they may not play back in Quicktime or Flash player. They don't support the H264 profiles used for Blu-Ray authoring.

It raises another question: what settings do I need to encode the comp in 720p resolution without taking up lots of space?

Well, it depends on whether you need a production master (something for broadcast, for example, or to use as a source for other encoding tasks) or if you want a version for distribution. If it's the former, there's nothing wrong with "lots of space" - A Quicktime file with PNG or Animation codec is a good idea, but it will take a lot of space. If it's the latter, H264 is perfect but there's no built-in preset to take 720 material to the web.

You could do this:

* Pick the generic H264 template. You'll see that it will give an error if you attempt to render, because the default setting uses an H264 profile/level which doesn't let you use HD resolutions.

* In the H264 video options, set the "Profile" menu to "Main" and "Level" to 4.0. That will keep it compatible to Quicktime and Flash player, while allowing larger frame sizes and higher bit rates.

* Set Target Bitrate to 5-8 Mbps and Maximum Bitrate to 9-10 Mbps if you're targetting web delivery. That's a bit over what Apple uses for 720p content on the Apple TV, for example.

The H264 original preset will instruct you in the comment field to stretch to 640x480 in Output Module. There's no need, since you are using a profile/level combination which allows higher frame sizes.